The Institute of Chartered Accountants for England and Wales has told the Treasury that the forthcoming changes to child benefits to parents “is seriously flawed in principle and in practice”.

From January 2013 any family with a parent earning more than £50,000 a year will lose a proportion of their entitlement and those with a single earner on more than £60,000 a year will not receive it at all.

Child benefit is a tax-free payment that is aimed at helping parents cope with the cost of bringing up children. The current benefit allows parents to claim £20.30 a week for their first child and £13.40 a week for each of their other children.

For those who earn more than £60,000 and continue to claim the benefit they will have to declare it in a Self-Assessment Tax Return which could also result in penalties if parents do not complete it correctly.

The institute has made the point that the plans could be unworkable as they seek to combine the benefits system, which is based on households, and the tax system, which is based on individuals.

If you are likely to need help in completing your 2012/13 Tax Return please contact us to discuss.

Thank you for reading our article - Child Benefit Payments to Parents are Changing -from Tax Innovations - Tax, Accountancy and Payroll advice -

HM Revenue & Customs (HMRC) have recently sent out 12,000 daily penalty notices in error to people who had been told that they no longer needed to fill in Self Assessment Tax Returns.

In the letter it explained that to add to the long-standing fixed penalty of £100 for late filing, fines of £10 a day would be incurred.

Each year, millions of people in the UK have to fill in Self Assessment Tax Returns.  A spokesperson for the HMRC has said “It is very unfortunate that this process error has taken the shine off the good news that we have taken 130,000 people out of Self Assessment.”

Each person affected will receive a letter of apology.

If you would like any advice regarding the above article or would simply like to discuss other ways in which we could help you and your business, please contact us on 01962 856 990 or customerserivce@taxinnovations.com

Thank you for reading our article - HMRC apologises after sending Self Assessment penalty notices in error -from Tax Innovations - Tax, Accountancy and Payroll advice -

QNUPS

On 13 February 2010 new UK legislation introduced the Qualifying Non-UK Pension Scheme or QNUPS in an attempt to clarify ambiguous aspects of the previous UK tax treatment. QNUPS are a flexible and tax efficient pension scheme that should be of great interest to individuals such as well-remunerated/executive employees and owner managed businesses who

• feel restricted by either the lifetime or annual contribution limits that apply to registered UK pensions,
• have an existing scheme or benefit trust that no longer meets their needs, or
• have substantial assets and are considering how to structure these investments to maximise growth for the future.

 
No limits

Unlike approved UK pensions, there are no limits on the size of contributions to a QNUPS, meaning that high earners who have already maximised their annual/lifetime contributions to registered schemes can continue to provide tax efficiently for their future.

Flexibility

A QNUPS is able to use contributions to invest in a wide range of assets including:

• private equity shares (including the member’s personal company)
• share options
• securities
• commercial/residential property
• intellectual property
• chattels
• assets of pre-existing trusts or pension schemes

 
This means that the QNUPS is able to build a portfolio based on the assets that the member feels are suitable and so maximise growth. It may also, in certain situations, be able to take over management of assets held by previously established structures and pensions (such as an EBT) that are no longer suitable for the member’s  needs. A QNUPS is equally flexible whether you plan to remain in the UK or perhaps intend to retire outside the UK.

Tax-Free Growth

Investments made by the QNUPS will be held in a tax efficient environment, free from capital gains tax on growth and with limited or no income tax on investment returns such as dividends, interest and rental income. The QNUPS is therefore better able to benefit from the investments it makes; using untaxed income and gains to build and expand its portfolio beyond what would be possible in a registered UK pension scheme.

Retirement Benefits

Unlike with traditional pension schemes, members are able to access cash held by a QNUPS prior to retirement as members can take commercial loans of up to 25-30% of the fund. As with standard UK pensions, on retirement a 25% tax-free lump sum can be received from the QNUPS.  There is flexibility as to how the remainder of the fund can be taken, meaning that income can vary from year to year to take account of changing circumstances.

Inheritance Tax

A QNUPS is free from inheritance tax meaning that assets held by the QNUPS on the member’s death can pass tax-free to their children or other specified individuals.

For advice or a free initial consultation with us, please contact us on 01962 856 990 or customerservice@taxinnovations.com.

Thank you for reading our article - Qualifying Non-UK Pension Schemes (QNUPS) -from Tax Innovations - Tax, Accountancy and Payroll advice -

The 2011-12 tax year ended on 5 April 2012 and employers are being reminded by HM Revenue & Customs (HMRC) to submit their annual P35 payroll Returns on time, or be liable to penalties.

The annual P35 payroll Return provides information on each employee’s tax and National Insurance deductions during the tax year and must be submitted to HMRC online by the 19 May to meet the year end deadline. Employers should also bear in mind that even if you have not made any payments to any employees during the year, if you have a PAYE scheme registered, you are required to notify HMRC that no Return is due to avoid a penalty being issued.

If as an employer your P35 Return is filed late, you will be charged a penalty of £100 per 50 employees for each month, or part month, that your Return is outstanding.

Employers who are not registered for online filing need to sign up as soon as possible to HMRC’s PAYE Online service. The registration process is quick, but you will not be able file online until you have activated the service using a code that HMRC sends you in the post. This can take a week to arrive so you should not delay registration.

Further imminent deadlines for employers to observe are as follows:

• Forms P46 (Car) for the quarter to 5 April 2012 must be filed by 3 May 1012. These are employer notifications to HMRC advising when employees receive/change their employer provided/company cars.
• 31 May 2012 is the date your employees who had tax deducted and were employed at year end should receive their end of year forms P60 showing total pay and tax for the 2011-12 year.
• Forms P11D detailing employees’ non-cash benefits in kind and expenses not covered by HMRC dispensations should be filed by 6 July 2012.
• 2011-12 PAYE Settlement Agreements (PSAs) must be signed and in place with HMRC by 6 July 2012, and payments of tax/Class 1 B National Insurance should be made by 22 October if payment is electronic (and by 19 October if you are paying by cheque).

 
Tax Innovations are available to help run payrolls, file year end Employer Returns, prepare forms P11D and negotiate PSAs with HM Revenue & Customs. Please contact us if you require help in any of these areas.

Thank you for reading our article - A busy year end – Employers 2011-12 PAYE deadlines! -from Tax Innovations - Tax, Accountancy and Payroll advice -

The UK Remittance Basis Charge (RBC) applies to non-domiciled individuals who are UK tax resident for a number of years and wish to claim the “remittance basis” of taxation rather than the “arising basis” of taxation. Under the remittance basis, individuals pay UK tax only on non-UK income/gains remitted to or brought to the UK. Under the arising basis, full UK tax is paid on all income/gains, whether UK sourced or non-UK sourced.

The RBC has been set at £30,000 per individual per tax year since its introduction for the 2008-09 year, where someone has been UK tax resident for seven out of the nine previous UK tax years.

From April 2012 (i.e. for the 2012/13 tax year onwards), the RBC will be increased to £50,000 per individual per tax year for longer term UK tax residents that have been resident in the UK in at least twelve of the previous fourteen UK tax years.

In summary, from 2012/13, two different RBCs can apply, depending on the length of time an individual has been a UK tax resident:

• The £30,000 RBC will apply if the remittance basis is claimed and the individual has been UK tax resident in at least seven of the previous nine UK tax years, and

• The £50,000 RBC will apply if the remittance basis is claimed and the individual has been UK tax resident in at least twelve of the previous fourteen UK tax years.

 
The RBC cannot apply to individuals under the age of eighteen, but periods in which the individual is UK tax resident while less than eighteen are considered in determining the RBC to apply once an individual reaches their eighteenth birthday.

Individuals wishing to claim the remittance basis need to nominate foreign income/gains against which to pay the RBC. This is a complex process and we would urge you to contact us for advice if you are unsure of any aspect. If you nominate non-UK income rather than capital gains this can increase the level of the “payments on account” you will need to make in advance of settling your final UK tax liability each year.

For advice or a free initial consultation with us, please contact us on 01962 856 990 or customerservice@taxinnovations.com.

Thank you for reading our article - Increase in UK Remittance Basis Charge from April 2012 -from Tax Innovations - Tax, Accountancy and Payroll advice -

HM Revenue & Customs (HMRC) is urging anyone who has still not done their 2010/11 UK Self Assessment Tax Return to file it on-line before the end of April 2012, or be charged daily penalties from 1 May.

Anyone whose Self Assessment Tax Return is more than three months late (i.e. not filed by 30 April) will now be charged a further £10 penalty for each day it remains outstanding, up to a maximum of 90 days. This is in addition to the £100 late-filing penalty they will already be liable for.

This means people who file their 2010/11 Tax Return on-line on or after 1 May will be liable to daily penalties, as the deadline for these was 31 January. Daily penalties for paper Tax Returns began on 1 February, as paper Returns were due to be filed by the earlier deadline of 31 October 2011.

Looking ahead, further penalties of at least £300 (or 5 per cent of the tax due, if that is more) will be issued for Returns that are 6 and 12 months late.

Anyone who has not yet filed their 2010/11 Tax Return can contact us on an urgent basis to discuss their options. It may be possible to file the necessary Return initially on an estimated basis to avoid certain penalties, or have the Tax Return cancelled if you can argue that “Self Assessment” should not apply in your case.

Thank you for reading our article - HMRC penalties for Tax Returns outstanding at 1 May 2012 -from Tax Innovations - Tax, Accountancy and Payroll advice -

Germany and Switzerland have recently announced an increase to the rate of tax chargeable on undeclared accounts under their double tax agreement, and this change is likely to impact on UK based holders of Swiss bank accounts too. This is because a clause in the UK-Swiss treaty allows for the UK to ask for changes to the deal in order to reflect any renegotiation of the German-Swiss arrangement.

Since the current UK-Swiss agreement has been regularly criticised it seems likely that the government will use this opportunity to increase the level of tax charged under the arrangement. If changes are made, the new rates for one-off charges on undeclared accounts are likely to be 21-41% rather than the current 19-34%. This potential change could make holding a Swiss account far less desirable, especially in light of other proposed changes to the inheritance tax treatment of such funds.

These changes mean that anyone with an undeclared offshore assets may benefit from considering making use of the UK-Liechtenstein agreement, which offers far more favourable terms.

Thank you for reading our article - UK – Swiss Tax Changes -from Tax Innovations - Tax, Accountancy and Payroll advice -

It seems that HMRC are applying the letter of the law and charging penalties in cases where there is a late notification of a change of legal entity.

The law says that a person who becomes liable to register for VAT by virtue of taking over a business as a going concern must notify HMRC of the fact within thirty days of the transfer date. Failure to do so renders the person liable to a penalty unless there is reasonable excuse. HMRC’s current policy seems to be to charge a penalty even where all returns and payments have been made on time.

Strictly, HMRC are able to calculate the ‘Potential Lost Tax’ (PLT) as being the VAT due from the date notification was required up to the date notification was made. The maximum penalty is 30% although mitigation can reduce this to nil.

We believe that HMRC have conceded and withdrawn the penalties where these have been challenged. If you receive a penalty as a result of a change of legal entity, please contact us so that we can take the matter up with HMRC on your behalf.

Thank you for reading our article - VAT – HMRC penalising ‘Failure to Notify’ change of status cases -from Tax Innovations - Tax, Accountancy and Payroll advice -

The VAT Flat Rate Scheme celebrated its tenth anniversary on 1 April 2012. The Scheme has produced time and tax savings for many small businesses.

The general principle of the scheme is that traders with taxable turnover of less than £150,000 do not reclaim input tax on purchases because the VAT paid is set at a fixed percentage of the VAT inclusive turnover depending on the trade category. However, scheme users can reclaim input VAT on the purchase of capital goods costing more than £2,000 including VAT. There is no relief for services costing more than £2,000.

Scheme users can reclaim pre-registration VAT on goods and services in exactly the same way as non-scheme members. It is therefore important to consider carefully the timing of the purchase of services (for example, the design and set-up of a website) because these will be recoverable if the service is purchased in the six months before registration but not if it is purchased after registration.

If you would like to discuss the benefits of operating the Flat Rate Scheme or the timing of major expenditure, please do not hesitate to contact us.

Thank you for reading our article - VAT – Benefits of the Flat Rate Scheme -from Tax Innovations - Tax, Accountancy and Payroll advice -

From 1 April 2012, all VAT-registered businesses will have to file their VAT Returns online. Businesses will need to register for HMRC’s VAT Online Service before filing their first online Return. It is important not to leave this until the last minute because it can take a few weeks to receive the unique user ID that you need.

Businesses will no longer be able to pay the VAT due by cheque. Payment will have to be by direct debit, bank transfer, a personalised bank giro payment slip paid in at a bank (these have to be ordered in advance) or by a debit or credit card over the internet. HMRC will now accept payments by the faster payments service. However, many bank accounts can only pay out up to £10,000 by electronic payments in one day, so a business may have to spread the payment over several days.

We can file your VAT Return electronically on your behalf once your business has registered with HMRC. We will need all your VAT information in good time before the VAT Return is due so that we can deal with the Return well before the deadline.

If you need advice on the above points please contact us on 01962 856 990 or email customerservice@taxinnovations.com

Thank you for reading our article - Online VAT Filing Compulsory -from Tax Innovations - Tax, Accountancy and Payroll advice -